Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar made this announcement during the 19th National Housing & Property Summit 2016 yesterday, 8 September.

He explained that the special scheme will not involve the central bank (Bank Negara Malaysia) and license would be issued by his ministry under the Moneylenders Act 1951 and Pawnbrokers Act 1972. The interest rates under the scheme are a maximum of 12% with collateral and up to 18% without collateral.

"This proposal is a win-win situation for both developers and house buyers. For the developers, this end-financing facility offers a second profit centre. First, of course, from the sales (sic) of these houses and second from the proceeds of the end-financing scheme that I am proposing," Noh Omar was quoted as saying.

"In order to relief burden to the buyers, sometimes it's hard for them to get bank loans, that's why the ministry agreed to give money lending licenses to any developer that is interested, especially developers that are more established."

However, the proposal apparently does not sit well with many Malaysians

Local netizens said that the interest rates are too high, and rich developers can “legalise themselves as Ah Long (loan shark)".

With this proposal, they also argued that this would open up the possibilities for developers to impose nonsensical terms and condition on buyers, particularly people who are desperate to purchase a property.

Many also said that this could result in a major crisis for the country, making reference to the subprime mortgage crisis in the U.S where borrowers were approved for loans they could not afford and as a result, triggered a financial crisis that had severe consequences for the U.S. and European economies.

PKR’s Rafizi Ramli described the plan as the "craziest move" that will "kill economy (and) the rakyat at one go"

The Pandan MP argued that the announcement was made without any prior public discussion with the stakeholders, particularly buyers, economists, the finance sector and Members of the Parliament.

"In the past year, I have not heard even once any of the central bank leadership make a statement on this matter, especially when this will bring one the biggest changes to the housing loan sector that being is regulated by Bank Negara Malaysia," he wrote on his blog today.

He went on to list three biggest risks that the rakyat is about to face if the plan is not scrapped.

First, Malaysia would risk facing a subprime crisis with this implementation. Secondly, he claims that the situation would be similar to "licensing Ah Long". Thirdly, Rafizi said that many more Malaysians will not be able to afford to buy a house, and only the big players in the industry will be able to compete in the business.

Other opposition leaders also shared the same sentiments with Rafizi, saying that there are serious repercussions to having developers turn into moneylenders

"Allowing developers to loan to home buyers, especially at such high-interest rates, will only further exacerbate Malaysian household debts problems, making households even more vulnerable to economic shocks," Damansara Utama MP Yeo Bee Yin was quoted as saying by Malaysiakini.

She explained property price will go even higher and make housing even more unaffordable as a result of speculative behaviour encouraged by property developers who approve loans easily to enable them to sell their properties at artificially high prices.

"We urge Putrajaya to abort the proposed new scheme that allows property developers to become the loan sharks to home buyers," she added.

Echoing Yeo, Lembah Pantai MP Nurul Izzah Anwar also said that the government should scrap the plan and address the issue by solving the root of the problem.

"We need to go back to solving the root of the problem by improving comprehensive policies and reevaluating the ownership of affordable housing, coupled with a transparent and people-friendly banking policy," she reportedly said in a statement.

On the other hand, former Real Estate and Housing Developers’ Association Malaysia (Rehda) Ng Seing Liong has said that developers should not be likened to loansharks